Pharmaceutical Industry Patent Assessment Patents are a key element of Intellectual Property and provide a competitive edge to the pharmaceutical industry. The exclusive property rights provided by patents restrict competition in production and sales of medicine allowing companies to charge higher prices without concern for competition. The global standard of twenty years from the application date protecting the company’s significant research and testing investment. This is standard is important because it can take 10-15 years to develop a single product. Pharmaceutical industry patents also have tremendous impact on health care policies due to their influence on the cost of medicine.
The cost of insurance has increased dramatically over the past decade, far surpassing the general rate of inflation in most years. Between 1989 and 1996, the average amount an employee had to contribute for family coverage jumped from $935 to $1778. In 1990, American companies spent $177 billion on health benefits for workers and their dependents; that number rose to $252 billion by 1996, or more than double the rate of inflation. Among the cost drivers: an aging population – the number of senior citizens who need health benefits is increasing dramatically every year; medical technology advances – which decreased the death rate; new drugs – expensive and effective, which make us live longer; and of course the increase of fear in medical litigations among doctors. Increase in usage will surely increase the cost of health care.
BACKROUND The pharmaceutical industry's claim that high and increasing drug prices are needed to sustain research and development is a lie to the American public. Drug companies are spending more than twice as much on marketing, advertising, and administration than they do on research and development; that drug company profits, which are higher than all other industries, exceed research and development expenditures; and that drug companies provide lavish compensation packages for their top executives. Recent prices rose more than twice the rate of inflation last year and among the top nine pharmaceutical companies (Merck, Pfizer, Bristol-Myers Squibb, Pharmacia, Abbott Laboratories, American Home Products, Eli Lilly, Schering-Plough, and Allergan), all but one (Eli Lilly) spent more than twice as much on marketing, advertising, and administration than they did on research and development, and Lilly spent more than one and one-half times as much. Six out of the nine companies made more money in net profits than they spent on research and development last year. The executive with the highest compensation package in the year 2004, exclusive of unexercised stock options, was William C. Steere, Jr., Pfizer's Chairman, who made $40.2 million.
The Rise in the Price of Prescription Drugs In the business of drug production over the years, there have been astronomical gains in the technology of pharmaceutical drugs. More and more drugs are being made for diseases and viruses each day, and there are many more drugs still undergoing research and testing. These "miracle" drugs are expensive, however, and many Americans cannot afford these prices. Prescription drug prices rose three times faster than inflation in the decade between 1981 and 1991, making the pharmaceutical industry the nation's most profitable business. Prescription drugs even exceeded the rapidly rising inflation rate for all other medical services.
Medication errors in the United States cost hospitals and insurance companies billions of dollars every year. Each year written prescription errors cost thousands of Americans their life. Medication errors are costly to the healthcare system and the implementation of the electronic prescription system in hospitals and physician offices is sporadic. The government has implemented many incentive programs to encourage hospitals and private practices to adopt the use of electronic prescription systems. The introduction of the electronic prescription has reduced medication errors in hospitals and physician’s practices cutting the cost of health care.
(Steele 47) Drugs prices are not likely to fall back down to what they were years ago. They fall into the same category as fuel prices for automobiles; they always increase. There are more pharmaceutical companies present in the U.S. than any other country in the world. Th... ... middle of paper ... ...one since the U.S. Government supports this delirious act of ripping off senior citizens. In conclusion, pharmaceutical companies are extremely edacious and cold-blooded.
Sales of herbal supplements reached $4 billion in 1998, up from $1.6 billion in 1994 , a rise of 250% (American Botanical Council 1998). Sales have been projected to increase between 50-100% in 1998-99 and between 20-25% in 2000-01(Scimone and Scimone 1998). What has caused this dramatic increase? While an editorial in the New England Journal of Medicine (1998) blamed this "reversion to irrational approaches" on "disillusionment with the often hurried and impersonal care delivered by conventional physicians", it is also viewed as the economic influence of the aging baby-boomers. As they have become older, this generation has become more health conscious and increasingly dissatisfied with conventional medicine in their attempts to diminish the adverse effects of aging (Brenneman 1999).
The entry of these players made the industry intense with tough competition, low profit margins and collapsed prices. The segment of drug industry where Teva had to come up with innovative drugs demands to invest high capital on R&D that was in billions for a single drug could potentially lower the growth and revenues for Teva and could push the company in serious troubles. Analysis To build some effective and real world alternatives and recommendations to Teva Pharmaceuticals we would conduct following analysis to understand external and internal situation of the company. Internal and External Analysis SWOT Analysis (Exhibit 1) Strengths: Teva had a strong customer base because of its presence in 50 countries globally and had acquired 14 very competent companies. The company had a reputation of world’s #1 generic drug company with substantial market share.
While prescriptions are a relatively small portion of overall health spending, they are a main reason for certain health spending trends, growing almost twice as fast all other health services in recent years. Prescription costs can be the costliest expense in your budget, especially if you are on a fixed income. The wealthy can easily afford their medications, but for an increasing population such as the elderly, choosing among purchasing medication, paying bills, or buying food is a real concern. Rising prescription drug prices are driving nearly two million Americans to cross international borders to seek necessary medications. Some are physically venturing into Canada and Mexico for the pharmaceuticals, while others are turning to mail-order pharmacies via the Internet.
As a result, manufacturer expenditures on direct-to-consumer advertising, which totaled $791 million in 1996, rose to $2.6 billion for the year 2000 (Mitchell, 2001). Television, radio, and print media became saturated with ads promoting treatments for conditions ranging from depression to high cholesterol. Names such as Zoloft, Claritin, and Lipitor, which were previously known mostly to health professionals, quickly became part of the national vocabulary. Consequently, spending on prescription drugs has increased significantly over the past several years as consumers are enticed to seek advertised medications (HealthBizNews.com, 2001). This new face of drug marketing has sparked a raging debate about the accompanying e... ... middle of paper ... ...e of drug advertising?"